According to a number of real estate specialists interviewed by popular Brazilian newspaper Estadão – whilst Brazil’s market outpaced those of most of the developed nation’s economies in 2010 – rapid growth patterns are unlikely to be witnessed this year.

Amongst the observations being made are that supply, in some parts of the metropolitan regions of the country, is slightly outweighing demand – with Luiz Pompeii of EMBRAESP stating: “some prices have had a very big jump without justification.”  He also states that, in São Paulo, a number of developers have been having some difficulty in selling all of their pre-launch stock.

Others believe that, after a long period of devaluation, Brazil’s house prices recovered rapidly with economist Francis Hesse indicating: “the so-called boom trend we have witnessed in recent years is stabilising” suggesting that prices have become unrealistic in terms of what people are willing to pay.  He continues to indicate that, as a result of scarcity of land in urban centres, developers have began to look into the periphery which has led to a perplexing situation where a new property in the outskirts costs the same as a used one in the city centre.

João Rocha Lima also of the University of São Paulo, whilst not believing that any type of crash is imminent, states that the returns on investment property have also been affected as rental figures have not increased sufficiently to present good yields.  He goes on to suggest that the growth of Brazilian real estate funds will continue their increasing popularity in 2010: “it is better to purchase a small fraction of a large property than to be the sole owner of a small one.”

Ruban Selvanayagam

www.brazilinvestmentguide.com